Author Topic: Changing jobs and handling retirement accounts for the first time!  (Read 931 times)

secondchance

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Please help -- sorry these questions are so basic, but I am super new to this and confused about retirement accounts! 

I signed up for my company's 401k and Roth IRA at the new year, just in time to leave.  As you would expect I have not accrued much money: about $3,200 in the 401k and $1,330 in the Roth IRA.

The new company offers only a 401k (my choice of traditional or Roth) and matches 50% of the first 6% I save per pay period.

I assume I'm going to:
- Roll over the 401k into a traditional IRA.
- Roll over the Roth IRA into an individual Roth IRA (?)

My questions are:
- Am I right to think I can do this?
- Who can I do this with? I have a regular investment account with Vanguard so keeping things with them would be my preference.
- Just read that rolling over does not count against my IRA limit.  If so, should I hustle up and max it out for 2017 because the tax cutoff is April 15?

Then for the new job:
- Will my contributions from the new job start from zero, for 2018, since I will get my first paycheck after April 15?
- Employer contributions to my 401k don't count toward my $18,500 limit, right?  I was told they did, but then I read they didn't.
- Since my new job does not offer an IRA, will I be able to contribute to one on my own?

I'm so confused -- thank you so much for your help!  It's not a lot of money, but the important part is setting myself up for this year/job right away with knowledge and intention.
« Last Edit: March 22, 2018, 06:51:56 PM by secondchance »

Gone_Hiking

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Re: Changing jobs and handling retirement accounts for the first time!
« Reply #1 on: March 22, 2018, 08:12:55 PM »
Does your employer allow you to roll over the money?  The reason I'm asking because, with $3200 in your 401(k) your account might subject to automated actions by the employer if you don't do anything soon.  My employer automatically rolls over any 401(k) balance under $5000 to some Bankcorp IRA after 30 days.

Since you're asking whether you can roll over the money to accounts of your choice, yes, this is indeed the case.  If your employer has policies like mentioned above, just do it soon.
Open an IRA with Vanguard once you do, Vanguard will help you with the rollover.  There is usually a form you will have to send to your current IRA management.
Rollovers do not count against IRA limit.  By all means, hustle up and add the max.

Now, about that new job...
you are correct that your contributions to new 401(k) account will start form 0.
Your employer's contribution does not count towards the limit.
Yes, you will be able to contribute to the IRA you open at Vanguard and to your 401(k).  There are income limits on tax deductibility of contribution, however.  For 2018, deductibility phases out between $63,000 and $73,000 for singles and $101,000 and $121,000 for married people filling jointly. 

If your IRA contribution is not deductible, you could increase your contribution to regular investment account, which likely will be more tax efficient than nondeductible traditional IRA and not subject to required minimum distributions in the future.  I hope this helps.

Catbert

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Re: Changing jobs and handling retirement accounts for the first time!
« Reply #2 on: March 23, 2018, 01:13:04 PM »
Does your employer allow you to roll over the money?  The reason I'm asking because, with $3200 in your 401(k) your account might subject to automated actions by the employer if you don't do anything soon.  My employer automatically rolls over any 401(k) balance under $5000 to some Bankcorp IRA after 30 days.

Since you're asking whether you can roll over the money to accounts of your choice, yes, this is indeed the case.  If your employer has policies like mentioned above, just do it soon.
Open an IRA with Vanguard once you do, Vanguard will help you with the rollover.  There is usually a form you will have to send to your current IRA management.
Rollovers do not count against IRA limit.  By all means, hustle up and add the max.

Now, about that new job...
you are correct that your contributions to new 401(k) account will start form 0.
Your employer's contribution does not count towards the limit.
Yes, you will be able to contribute to the IRA you open at Vanguard and to your 401(k).  There are income limits on tax deductibility of contribution, however.  For 2018, deductibility phases out between $63,000 and $73,000 for singles and $101,000 and $121,000 for married people filling jointly. 

If your IRA contribution is not deductible, you could increase your contribution to regular investment account, which likely will be more tax efficient than nondeductible traditional IRA and not subject to required minimum distributions in the future.  I hope this helps.

I don't think this part is correct.  Any 401k contributions made between 1 January 2018 and 31 December 2018 count against your limit.  If OP has contributed to a 401k already this year s/he'll need to ensure not to go over the limit.

Gone_Hiking

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Re: Changing jobs and handling retirement accounts for the first time!
« Reply #3 on: March 23, 2018, 06:24:42 PM »
Does your employer allow you to roll over the money?  The reason I'm asking because, with $3200 in your 401(k) your account might subject to automated actions by the employer if you don't do anything soon.  My employer automatically rolls over any 401(k) balance under $5000 to some Bankcorp IRA after 30 days.

Since you're asking whether you can roll over the money to accounts of your choice, yes, this is indeed the case.  If your employer has policies like mentioned above, just do it soon.
Open an IRA with Vanguard once you do, Vanguard will help you with the rollover.  There is usually a form you will have to send to your current IRA management.
Rollovers do not count against IRA limit.  By all means, hustle up and add the max.

Now, about that new job...
you are correct that your contributions to new 401(k) account will start form 0.
Your employer's contribution does not count towards the limit.
Yes, you will be able to contribute to the IRA you open at Vanguard and to your 401(k).  There are income limits on tax deductibility of contribution, however.  For 2018, deductibility phases out between $63,000 and $73,000 for singles and $101,000 and $121,000 for married people filling jointly. 

If your IRA contribution is not deductible, you could increase your contribution to regular investment account, which likely will be more tax efficient than nondeductible traditional IRA and not subject to required minimum distributions in the future.  I hope this helps.

I don't think this part is correct.  Any 401k contributions made between 1 January 2018 and 31 December 2018 count against your limit.  If OP has contributed to a 401k already this year s/he'll need to ensure not to go over the limit.

@Catbert , thank you for righting my erroneous statement.    I stand corrected, OP.